23d  Congress, 
15/  Session. 


[  72  ] 


IN  SENATE  OF  THE  UNITED  STATES. 
February  5,  1834. 


Read,  and  ordered  to  be  printed,  and  that  6,000  additional  copies  be  furnished  for  the  use 

of  the  Senate. 


Mr.  Webster,  from  the  Committee  on  Finance,  (which  consists  of  Messrs. 
Webster,  Tyjler,  Ewing,  Mangum,  and  Wilkins,)  made  the  fol¬ 
lowing 

REPORT: 


The  Committee  on  Finance ,  to  whom  has  been  referred  the  report  of  the  Se¬ 
cretary  of  the  Treasury  of  the  3 d  of  December ,  1833,  on  the  removal 
of  the  public  deposit  es  from  the  Bank  of  the  United  States,  and  a  re¬ 
solution,  submitted  to  the  Senate  by  an  honorable  member  from  Ken¬ 
tucky,  declaring  that  the  reasons  assigned  by  the  Secretary  for  the  re¬ 
moval  oj  the  said  deposit  es  are  unsatisfactory  and  insufficient ,  have 
agreed  on  the  following  report: 

The  act  incorporating  the  Bank  of  the  United  States,  as  is  justly  remarked 
by  the  Secretary,  is  a  contract,  containing  stipulations  on  the  part  of  the 
Government,  and  on  the  part  of  the  corporation,  entered  into  for  full  and 
adequate  consideration. 

The  Government  became  party  to  this  contract  by  granting  the  charter, 
and  the  stockholders  by  accepting  it.  “In  consideration,”  says  the  charter, 
“of  the  exclusive  privileges  and  benefits  conferred  by  this  act  on  the  said 
bank,  the  president  and  directors  thereof  shall  pay  to  the  United  States,  out 
of  the  corporate  funds  thereof,  one  million  and  five  hundred  thousand  dol¬ 
lars,  in  three  equal  payments;”  and,  in  another  section,  it  declares  that 
“during  the  continuance  of  this  act,  and  whenever  required  by  the  Secreta¬ 
ry  of  the  Treasury,  the  said  corporation  shall  give  the  necessary  facilities 
for  transferring  the  public  funds  from  place  to  place  within  the  United 
States  or  the  Territories  thereof,  and  for  distributing  the  same  in  payment 
of  the  public  creditors,  without  charging  commissions,  or  claiming  allow¬ 
ance  on  account  of  difference  of  exchange;  and  shall  do  and  perform  the 
several  and  respective  duties  of  the  commissioners  of  loans  for  the  several 
States,  or  any  one  or  more  of  them,  whenever  required  by  law.” 

The  section  immediately  following  this  provision,  is  in  these  would  “  And 
belt  further  enacted,  That  the  depositesof  the  money  of  the  United  Slates,  in 
places  in  which  the  said  bank  and  branches  thereof  may  be  established,  shall  be 
jpiade  in  said  bank  or  branches  thereof,  unless  the  Secretary  of  the  Treasury 
$}iall  gt  any  time  otherwise  order  and  direct;  in  which  case  the  Secretary 


cf  the  Treasury  shall  immediately  lay  before  Congress,  if  in  session,  and  if 
not,  immediately  after  the  commencement  of  the  next  session,  the  reasons 
for  such  order  or  direction. ” 

It  is  not  to  be  denied  or  doubted  that  this  custody  of  the  public  depositee 
y/as  one  of  the  “  benefits ”  conferred  on  the  bank  b}T  the  charter,  in  consi¬ 
deration  of  the  money  paid,  and  the  services  undertaken  to  be  performed,  by 
he  bank  to  the  Government;  and  to  this  custody  the  bank  has  a  just  right, 
onless  such  causes  have  arisen  as  may  have  justified  the  Secretary  in  giving 
an  order  and  direction  for  changing  that  custody.  Any  order  or  direction, 
therefore,  issued  under  the  provisions  of  this  law,  necessarily  involves  a 
consideration  of  the  just  extent  of  the  Secretary’s  power,  and  of  the  rights 
of  the  bank. 

But  Congress,  in  making  this  provision,  unquestionably  had  in  view  the 
safety  of  the  public  funds,  and  certain  important  financial  objects,  as  well  as 
the  making  cf  a  just  consideration  to  the  bank  lor  the  fum  paid,  and  the 
services  undertaken  by  it;  and  with  this  view,  also,  it  has  expressed  its  will, 
that  the  deposites  shall  continue  to  be  made  in  the  bank  until  good  cause 
shall  arise  for  ordering  otherwise.  Of  this  good  cause,  the  Secretary  of  the 
Treasury,  in  the  first  instance,  and  Congress,  ultimately  and  conclusively,  is 
onstituted  the  judge.  Every  order,  therefore,  of  the  Secretary  for  chang- 
ng  the  deposites  presents,  for  the  examination  of  Congress,  a  question  of 
general  political  propriety  and  expediency,  as  well  as  a  question  of  right  and 
obligation  to  the  bank. 

These  questions  may  be  considered  together.  They  are  intimately  con¬ 
nected;  because  the  right  of  the  bank  to  retain  the  deposites,  anu  to  enjoy 
the  advantages  to  be  derived  therefrom,  cannot  be  denied,  unless  a  case  is 
shown  to  have  arisen  within  the  just  power  of  removal  vested  in  the  Secre¬ 
tary,  and  which  made  it  his  duty  to  exercise  that  power.  The  Secretary  is 
only  to  remove  the  deposites  for  reasons.  Of  these  reasons  he  is  to  give  an 
account  to  Congress.  If  they  be  insufficient  to  justify  the  removal,  the 
bank  lias  a  right  to  a  return  of  the  deposites,  and  the  country  has  a  right, 
also,  to  expect  that,  in  that  case,  the  public  treasure  will  be  restored  to  its 
former  place  of  safety. 

The  Secretary  having  removed  the  deposites,  and  having  reported  his 
reasons  to  both  Houses,  the  whole  subject  is  now  before  Congress  by  way 
oi  appeal  from  his  decision;  and  the  question  is,  whether  that  decision  ought 
to  stand,  or  ought  to  be  reversed. 

The  power  of  the  Secretary,  under  the  law,  is  evidently  but  provisional. 
It  is  a  power  which  he  may  exercise  in  the  first  instance;  but  the  propriety 
ef  his  conduct,  in  every  instance  of  its  exercise,  is  ultimately  referred  to 
the  wisdom  of  Congress,  and  by  Congress  it  must  be  judged.  He  is  au¬ 
thorized  to  do  the  act,  but  Congress  is  to  examine  it  when  done,  and  to 
confirm  cr  reverse  it.  The  Secretary  may  change  the  deposites;  but  when 
ranged,  Congress  is  to  decide  on  the  causes  of  such  change,  with  authority 
either  to  sanction  the  removal,  or  to  restore  the  deposites,  according  to  its 
own  judgment  of  right  and  expediency. 

In  order  to  decide  whether  the  act  of  the  Secretary  ought  to  be  confirmed, 
it  is  requisite,  in  the  first  place,  to  form  a  just  opinion  of  the  true  extent  of 
his  power  under  the  law;  and,  in  the  second  place,  to  consider  the  validity 
of  the  reasons  wThich  he  has  speciall  assigned  for  the  exercise  of  that  power 
in  the  present  case. 


3^i  I 


2*1 


[  72  ] 


The  opinion  of  the  Secretary  is,  that  his  power  over  the  deposites,  so  fur 
;as  respects  the  rights  of  the  bank,  is  not  limited  to  any  particular  contin¬ 
gencies,  but  is  absolute  and  unconditional.  If  it  he  absolute  and  uncondi¬ 
tional  so  far  as  respects  the  rights  of  the  bank,  it  must  he  absolute  and  un¬ 
conditional  in  all  other  respects;  because  it  is  obvious  if  there  be  any  limi¬ 
tation,  that  limitation  is  imposed  as  much  for  the  benefit  of  the  bank  as  for 
the  security  of  the  country.  The  bank  has  contracted  for  the  keeping  of 
the  public  moneys,  and  paid  for  it,  as  for  a  privilege  or  benefit.  It  has 
agreed,  at  the  same  time,  that  the  Secretary  shall  possess  the  power  of  re¬ 
moval;  but,  then,  itisalso  agreed,  that  whenever  this  power  is  exercised, 
the  reasons  therefor  shall  be  reported  to  Congress;  Congress  being  thus  con¬ 
stituted  the  final  judge  as  well  of  the  rights  of  the  bank,  in  this  particular, 
as  of  the  good  of  the  country.  So  that  if  the  Secretary’s  power  be  in  truth 
absolute  and  unconditional,  it  restrains  Congress  from  judging  whether  the 
public  good  is  injured  by  the  removal,  just  as  much  as.  it  restrains  it  from 
judging  whether  the  rights  of  the  bank  are  injured  by  the  removal;  because 
the  limitation,  if  any,  is  equally  for  the  security  of  the  bank  and  of  the 
public. 

If  the  bank  be  interested  in  retaining  the  deposites,  then  it  is  interested 
in  the  truth  or  falsity,  in  the  sufficiency  or  insufficiency,  of  the  reasons  given 
for  their  removal.  Especially  is  it  so  interested,  since  these  reasons  are  to 
be  rendered  to  a  tribunal  which  is  to  judge  over  the  Secretary,  and  may 
form  a  different  opinion  on  the  validity  of  these  reasons,  and  may  reverse 
his  decision.  It  clearly  has  an  interest  in  retaining  the  deposites,  and  there¬ 
fore  is  as  clearly  concerned  in  the  reasons  which  the  Secretary  may  give  for 
their  removal.  And  as  he  is  bound  to  give  reasons,  this  very  circumstance 
shows  that  his  authority  is  not  absolute  and  unconditional.  Because,  how  can 
an  appeal  he  given  from  the  decision  of  an  absolute  power;  and  how  can  such 
a  power  be  called  on  to  give  reasons  for  any  instance  of  its  exercise?  If  it 
be  absolute,  its  only  reason  is  a  reference  to  its  own  will. 

The  committee  think,  therefore,  that  no  absolute  and  unconditional  power 
was  conferred  on  the  Secretary;  that  no  authority  was  given  him  by  which 
he  could  deprive  the  bank  of  the  custody  of  the  public  moneys,  without  rea¬ 
son;  and  that  therefore  his  opinion  is  not  to  be  admitted  that,  in  no  event, 
can  any  order  for  removing  the  deposites  impair  the  right  secured  to  the 
bank  by  the  charter.  If  removed  without  good  cause,  the  committee  think 
the  removal  does  impair  the  rights  of  the  bank 

But  the  opinion  of  the  Secretary,  as  to  his  own  powers,  is  hardly  more 
limiied  in  respect  to  the  Government  and  the  country,  than  in  regard  to  the 
rights  of  the  bank. 

His  opinion  is,  that  it  is  his  duty,  and  within  his  authority,  in  this  view, 
also,  to  withdraw  the  deposites  of  the  public  money  from  the  hank  when¬ 
ever  such  a  change  would,  in  any  degree,  promote  the  public  interest. 
“  The  safety  of  the  deposites, ”  he  says,  “the  ability  of  the  bank  to  meet 
its  engagements,  its  fidelity  in  the  performance  of  its  obligations,  are  only 
a  part  of  the  considerations  by  which  his  judgment  must  be  guided.  The 
.  general  interest  and  convenience  of  the  people  must  regulate  his  conduct.’' 

By  the  general  interest  and  convenience  of  the  people,  the  Secretary  can 
only  mean  his  own  sense  of  that  interest  and  convenience,  be  cause  they 
xre  no  otherwise  to  he  ascertained  than  by  his  own  judgment. 

The  Secretary’s  construction  of  the  law,  is,  therefore,  that  lie  has  power 
to  remove  the  deposits  whenever,  for  any  reason,  he  thinks  the  public 
good  requires  it. 


4 


72  ] 

In  this  interpretation  of  the  design  and  object  of  the  law,  and  this  broad 
Construction  of  the  Secretary’s  power,  the  committee  do  not  concur. 

Although  the  power  of  the  Secretary  is  not  restricted  by  any  express 
words  or  terms,  nor  by  any  particular  occasions  for  its  exercise  specifi¬ 
cally  and  expressly  designated  or  prescribed  by  the  law,  yet  it  is  not  to  be 
admitted,  as  the  committee  think,  that  this  power  is  to  be  exercised  capri¬ 
ciously,  or  in  an  arbitrary  manner,  or  for  loose  or  conjectural  reasons,  or  on 
any  idea  of  an  unlimited  discretion  vested  in  the  Secretary  to  judge  on  the 
general  question  of  the  public  welfare;  or,  indeed,  on  any  other  grounds 
than  those  of  necessity,  or  plain  and  manifest  expediency",  directly  connect¬ 
ed  with  the  subject  over  which  the  power  exists. 

The  keeping  of  the  public  money  is  not  a  matter  which  is  left,  or  was 
intended  to  be  left,  at  the  will  of  the  Secretary,  or  any  other  officer  of  the 
Government.  This  public  money  has  a  place  fixed  by  law,  and  settled  by 
contraH;  and  this  place  is  the  Bank  of  the  United  States.  In  this  place  it 
is  to  remain  until  some  event  occur  requiring  its  removal.  To  remove  it, 
therefore,  from  this  place,  without  the  occurrence  of  just  cause,  is  to  thwart 
the  end  and  design  of  the  lawr,  defeat  the  will  of  Congress,  and  violate  the 
contract  into  which  the  Government  has  solemnly  entered. 

It  is  fit  to  be  observed  that  no  other  law  confers  on  the  Secretary  such  a 
wide  discretion  over  the  public  interests  in  regard  to  any  subject,  or  gives 
him  a  power  to  acton  the  rightsof  others,  or  on  the  rights  of  the  public,  in  any 
part  of  Ids  official  duties,  with  so  unlimited  an  authority  as  is  here  asserted. 
Everywhere  else,  he  appears  in  the  character  of  a  limited  and  restricted 
agent.  He  is  the  financial  officer  of  the  Government;  he  is  the  head  of  the 
Department  of  the  Treasury.  His  duty  is,  to  report  annually  to  Congress 
the  state  of  the  finances,  and  to  communicate  to  either  House,  when  request¬ 
ed,  any  information  respecting  the  Treasury;  and  he  is  to  superintend  the 
collection  of  the  revenue.  But  he  has  no  authority  over  the  circulating 
medium  of  the  country,  either  metallic  or  paper;  nor  has  he  the  control  of 
the  national  currency.  It  is  no  part  of  his  duty  either  to  contractor  expand 
the  circulation  of  bank  paper,  nor  in  any  other  way  to  exercise  a  general 
superintendence  over  the  money  system  of  the  country.  These  general 
interests  of  the  Government  and  the  people  are  not  confided  to  his  hands 
by  any  of  the  laws  which  created  his  office,  and  have  prescribed  his  duties; 
and  the  committee  are  of  opinion  that  the  charter  of  the  bank  no  more  in¬ 
tended  to  give  such  a  wide  scope  to  the  Secretary  in  regard  to  the  deposites, 
than  other  laws  intended  to  give  him  the  same  wide  scope  in  respect  to 
other  duties  of  his  office.  No  intimation  of  such  intention  is  found  either 
in  the  charter  itself,  or  in  any  of  the  legislative  debates  which  took  place  in 
both  Houses  when  the  bank  wTas  established;  or  in  the  discussions  which 
have  been  had  on  the  various  occasions  which  have  been  more  recently  pre¬ 
sented  for  calling  forth  the  sentiment  of  Congress.  In  none  ol  these  sources 
is  there  to  be  found  any  proof  that  the  Legislature  has  delegated,  or  intend¬ 
ed  to  delegate,  this  extraordinary  power  of  judging  of  the  general  interest 
of  the  people  to  the  Secretary  of  the  Treasury.  Such  a  power,  did  he 
possess  it,  would  necessarily  make  him  the  general  superintendent  of  all 
the  proceedings  of  the  bank;  because  it  would  enable  him  to  compel  the 
bank  to  conform  all  its  operations  to  his  pleasure,  under  penalty  of  suffering 
a  removal  of  the  public  moneys.  This  would  be  little  less  than  placing  all 
the  substantial  power  of  managing  the  bank  in  his  hands.  But  he  is  not  by 
law  its  manager,  nor  one  of  its  managers;  nor  has  he  any  right,  in  any  form, 


5 


C  72  3 

to  interfere  in  its  management.  On  the  contrary,  the  very  language  of  the 
charter  rejects  all  idea  of  such  general  supervision  over  its  concerns  by  him, 
or  any  other  officer  of  Government.  That  language  is,,  that  “  for  the  man¬ 
agement  of  the  affairs  of  the  corporation  there  shall  be  twenty-five  di¬ 
rectors  annually  chosen;”  and,  under  the  restrictions  contained  in  the  char¬ 
ter,  these  directors  are  entrusted  with  the  whole  general  business  of  the 
bank,  subject,  of  course,  to  all  the  provisions  of  the  charter  and  the  by¬ 
laws;  subject,  too,  always  to  the  inspection  and  examination  of  either  House 
of  Co  ngress;  subject  always  to  regular  inquiry  and  trial,  and  bound  always 
to  communicate  to  the  head  of  the  Treasury  Department,  on  request,  state¬ 
ments  of  its  amount  of  stock,  debts  due,  moneys  deposited,  notes  in  circu¬ 
lation,  and  specie  on  hand. 

Under  these  restrictions,  the  establishment  of  its  offices,  and  the  appoint¬ 
ment  ot  its  officers;  the  amount  of  its  discounts,  and  every  thing  respecting 
those  discounts;  its  purchases  and  sales  of  exchange,  and  all  other  concerns 
of  the  institution,  are  to  be  conducted  and  managed  by  the  directors.  There 
is  nothing  in  the  charter  giving  the  slightest  authority  to  the  Secretary  to 
decide,  as  between  the  bank  on  the  one  hand,  and  the  Government  or  the 
people  on  the  other,  whether  the  general  management  of  the  directors  is 
wise  or  unwise,  or  whether,  in  regard  to  matters  not  connected  with  the  de- 
posites,  it  has  or  has  not  violated  the  conditions  of  its  charter.  The  state¬ 
ment  which  the  bank  is  bound  to  make  to  the  Secretary,  he  may  lay  before 
Congress;  and  he  is  doubtless,  bound  by  his  official  duty,  to  communicate  to 
Congress  any  other  information  in  his  possession,  tending,  in  his  judgment, 
to  show  that  the  bank  had  disregarded  its  charter,  or  failed  to  fulfil  all  or 
any  of  its  duties.  But  here  his  authority,  so  far  as  it  regards  the  general 
course  and  operations  of  the  bank,  ends.  It  is  then  for  Congress  to  act,  if 
it  see  occasion,  and  to  adopt  the  regular  remedies  for  any  evils  which  it 
may  suppose  to  exist.  But  it  transcends  the  power  of  Congress  itself  to 
pronounce  the  charter  violated,  without  hearing,  without  trial,  without 
judgment;  far  less  is  any  such  power  of  pronouncing  final  judgment  confided 
to  the  Secretary.  His  power  simply  is,  that  in  regard  to  the  deposites  of 
the  public  money,  he  is  to  judge,  in  the  first  instance,  whether  just  cause 
has  arisen  for  their  removal. 

The  Secretary  seems  to  suppose,  indeed  the  very  basis  of  his  argument 
assumes,  ihat  the  law  has  confided  to  him  a  general  guardianship  over  the 
public  welfare,  so  far  as  that  welfare  is  in  any  way  connected  with  the  bank, 
or  liable  to  be  affected  by  its  proceedings;  and  that  he  holds  the  power  of 
removing  the  deposites  as  the  means,  or  instrument,  by  which  he  is  to  en¬ 
force  his  own  opinions  respecting  that  welfare.  The  committee  do  not 
adopt  this  opinion.  They  think  that  if  such  had  been  the  design  of  the  law, 
its  provisions  would  have  been  very  different  from  those  which  it  does  ac¬ 
tually  contain. 

If  such  general  guardianship  had  been  intended  to  be  conferred  on  the  Se¬ 
cretary,  it  is  reasonable  to  believe  that  he  would  have  been  vested  with  pow¬ 
ers  more  suitable  to  such  a  high  trust.  If  he  had  been  made,  or  intended  to 
be  made,  general  inspector,  or  superintendent,  other  authority  than  merely 
that  ol  removing  the  deposites  would  have  been  given  him,  for  this  plain 
reasons,  that  the  Government  and  the  country  have  interests  of  much  mag¬ 
nitude  connected  with  the  bank,  besides  the  deposites  of  the  public  moneys 
in  its  vaults,  and  to  which  interests,  if  endangered,  the  removal  of  the  de¬ 
posites  would  bring  no  security. 


6 


l  ™  ] 

The  Government  is  proprietor  of  seven  millions  of  the  stock  of  the  bank; 
and  yet  no  authority  is  given  to  the  Secretary  to  sell  this  stock  under  any 
circumstances  whatever,  or  in  any  other  way  to  interfere  with  it. 

The  bills  and  notes  of  the  bank,  too,  are  made  receivable  in  all  payments 
to  the  United  States,  until  Congress  shall  otherwise  order;  and  no  power  is 
given  to  the  Secretary  to  prevent  their  being  so  received,  either  during  the 
session  of  Congress  or  in  its  recess,  however  the  credit  of  these  bills  and 
notes  might  become  depreciated. 

How  is  it  possible  to  conceive  that,  if  Congress  intended  to  give  to  the 
Secretary  a  general  right  to  judge  of  the  operations  and  proceedings  of  the 
bank,  and  a  power,  of  course,  to  declare  when  it  had  violated  its  duty,  and 
was  no  longer  trustworthy,  it  should  yet  leave  him  under  an  absolute  obli¬ 
gation  to  receive  its  bills  and  notes  in  all  payments  to  the  Treasury,  though 
they  might  have  lost  all  credit;  and  place  no  means  in  his  hands  to  execute 
his  high  authority  of  superintendent,  except  the  mere  power  of  removal? 

Wherever  it  is  clear  that  Congress  has  given  the  Secretary  a  power,  it  has 
given  him  the  means  of  informing  his  judgment  as  to  the  propriety  of  exer¬ 
cising  that  power.  He  has  powTer  to  remove  the  deposites;  and  ample  means 
are  afforded  him  by  which  he  may  learn,  from  time  to  time,  whether  those 
deposites  are  safe.  For  this  purpose,  it  is  expressly  made  the  duty  of  the 
bank  to  furnish  him,  so  often  as  he  shall  require,  if  not  oftener  than  once  a 
week,  with  statements  of  the  amount  of  the  capital  stock  of  the  corporation, 
of  the  debts  due  to  it,  of  the  moneys  deposited  in  it,  of  its  notes  in  circula¬ 
tion,  and  specie  on  hand;  and  he  has  a  right  to  inspect  the  general  accounts, 
in  the  books  of  the  bank,  relating  to  this  statement.  This  statement  enables 
him  to  judge  of  the  solvency  and  stability  of  the  bank,  and  of  the  safety  of 
the  public  money  deposited  in  it.  Here,  then,  is  a  power,  and  all  appropriate 
means  given  for  the  just  and  enlightened  exercise  of  that  power.  Confined 
to  the  deposites,  the  power  is  accompanied  with  all  rational  auxiliaries  and 
attendants. 

But  for  the  depreciation  of  the  bills  of  the  bank,  should  that  happen,  and 
for  other  cases  of  maladministration,  Congress  has  provided  just  and  appro¬ 
priate  remedies,  to  be  applied  by  itself  or  others,  in  exclusion  of  the  Secre¬ 
tary.  For  redress  of  these  evils,  no  power  is  given  to  him. 

For  the  security  of  the  public  interest,  the  law  reserves  a  right  to  either 
House  of  Congress  to  inquire,  at  all  times,  into  the  proceedings  of  the 
bank,  and  if,  on  such  inquiry,  it  appears  in  any  respect  to  have  violated  its 
charter,  Congress  may  bring  it  to  trial  and  judgment.  PowTer  is  given  to 
the  President,  also,  to  institute  judicial  proceedings,  if  he  shall  have  reason 
to  believe  that  any  such  violation  has  taken  place.  But  no  such  power  is 
given  to  the  Secretary. 

The  proposition,  then,  cannot  be  maintained,  that  Congress  has  relied, 
for  the  security  of  the  public  interests,  and  the  preservation  of  the  general 
welfare,  so  far  as  it  is  connected  with  the  bank,  on  a  general  discretion 
reposed  in  the  Secretary:  for  two  reasons,  first,  because  it  has  not  given 
him  the  appropriate  powers  of  remedy  in  the  most  important  instances;  and, 
secondly,  because  it  has,  in  those  instances,  either  expressly  reserved  those 
powers  to  itself,  or  expressly  conferred  them  on  the  President. 

If  the  Secretary  cannot  prevent  the  notes  of  the  bank  from  being  received 
at  the  custom  houses  and  the  land  offices,  even  after  the}’  should  be  discre¬ 
dited  ;  if  he  have  no  power  to  touch,  in  any  way,  the  seven  millions  of  stock 
belonging  to  the  Government ;  if  the  power  of  examination  into  the  pro- 


7 


L  72  3 

ceedings  of  the  bank  be  given,  not  to  him,  but  to  either  House  of  Congress; 
if  he  have  no  power,  but  Congress  and  the  President,  each,  has  power  to 
direct  a  legal  investigation  into  the  conduct  of  the  bank;  how  can  it  possibly 
be  maintained  that  a  general  inspection  and  guardianship  over  the  public 
welfare,  so  far  as  it  is  connected  with  the  bank,  is  confided  to  him;  and  that 
bis  authority  to  remove  the  deposites  was  given,  not  to  protect  the  depo- 
sites  themselves,  and  secure  their  proper  use,  but  to  enable  him  to  enforce 
upon  the  bank,  under  penalty  of  their  removal,  such  a  course  of  manage¬ 
ment  as  his  sense  of  the  public  interest,  and  of  the  convenience  of  the  people, 
may  require?  Such  a  construction  would  give  the  law  a  strange  and  an  un¬ 
deserved  character.  It  would  convert  the  power  of  removal,  intended 
for  remedy  and  redress,  into  a  mere  instrument  of  punishment;  and  it 
would  authorize  the  infliction  of  that  punishment  without  hearing  or  trial, 
in  the  very  cases  in  which  the  law  yet  says  that,  if  violation  of  duty  be 
charged,  the  charge  shall  be  heard  and  tried  before  judgment  is  pronounced; 
and  the  duty  of  preferring  this  charge,  and  of  prosecuting  it  to  judgment,  is 
given,  not  to  the  Secretary,  but  to  Congress  and  to  the  President. 

The  contingent  power,given  to  the  Secretary  to  remove  the  deposites 
evidently  shows  that  Congress  contemplated  the  possibility  of  the  happening 
of  some  sudden  evil  for  which  either  no  other  remedy  was  provided,  or 
none  which  could  be  applied  with  sufficient  promptitude;  and  for  which  evil 
removal  would  be  a  just  and  appropriate  remedy.  The  remedy  prescribed, 
then,  teaches  us  the  nature  of  the  evils  which  were  apprehended.  We  can 
readily  understand  that  threatened  danger  to  the  funds  was  one,  and  proba¬ 
bly  the  chief  of  those  evils;  because  change  into  other  hands  is  the  ready 
and  appropriate  measure  which  would  rationally  suggest  itself  to  all  minds 
as  the  proper  security  against  such  danger;  and  change  is  the  remedy  actual- 
Jy  prescribed.  Neglect  to  transfer  the  deposites  from  one  place  to  another, 
as  the  exigencies  of  Government  might  require,  and  thereby  to  furnish  those 
facilities  of  exchange  which  the  charter  demands  of  the  bank  without  com¬ 
mission  and  without  charge,  is  another  evil  for  which,  should  it  happen,  the 
remedy  would  naturally  be  the  withdrawing  of  the  funds,  and  the  placing 
of  them  in  their  former  custody,  so  that  they  could  be  transferred  or  ex¬ 
changed  by  the  Treasury  itself. 

But  who  can  see  any  connexion  or  relation,  such  as  ordinarily  exists  be¬ 
tween  an  evil  apprehended  and  a  remedy  proposed — between  such  an  evil 
.as  a  supposed  over-discount,  for  instance,  by  the  bank  at  one  time,  or  an 
under-discount  at  another,  and  the  abrupt  removal  of  all  the  public  deposites? 
And  if  no  one  can  see  the  connexion,  how  can  it  be  supposed  that,  in  giving 
the  power  of  removal  as  a  remedy,  Congress  had  in  view  any  such  evil? 

A  question  may  arise  between  the  Government  and  the  bank  respecting 
the  right  of  the  parties  to  the  sum  of  one  hundred  and  fifty  thousand  dol¬ 
lars,  as  in  the  case  of  the  French  bill. 

It  is  a  question  on  which  different  opinions  may  be  entertained,  and 
which  is,  in  its  nature,  fit  for  judicial  decision.  Does  any  man  imagine  that 
such  a  case  as  this  was  in  the  eye  of  Congress  when  they  granted  the  power 
of  w  ithdrawing  the  whole  public  treasure  from  the  bank?  Can  it  be  for 
one  moment  maintained,  that  Congress  intended  that,  in  such  a  case,  the 
Secretary  should  compel  the  bank  to  adopt  his  own  opinion,  by  the  exercise 
of  a  power,  the  very  exertion  of  which  deranges  the  currency,  interferes 
with  the  industry  of  the  people,  and,  under  some  circumstances,  would 
hazard  the  safety  of  the  whole  revenue? 


8 


C  72  1 

The  committee  think  it  cannot  admit  of  rational  doubt,  that  if  Congress 
had  intended  to  give  to  the  Secretary  any  power  whatever,  not  directly 
touching  the  deposites  themselves,  not  only  would  it  have  specially  pointed 
out  the  cases,  but  it  would  also,  most  assuredly,  have  provided  a  remedy 
more  suitable  for  each  case.  The  nature  of  the  remedy,  therefore,  which 
is  prescribed,  clearly  shows  the  evils  intended  to  be  provided  against. 

To  admit  that  the  Secretary’s  conduct  is  subject  to  no  control  but  his  own 
sense  of  the  general  interest  and  convenience  of  the  people,  is  to  acknow¬ 
ledge  the  existence,  in  his  hands,  of  a  discretion  so  broad  and  unlimited, 
that  its  consequences  can  be  no  less  than  to  subject,  not  only  all  the  opera¬ 
tions  of  the  bank  and  its  offices,  but  its  powers  and  capact'es,  perhaps  its 
very  existence,  to  his  individual  will.  He  is  of  opinion  that  the  law  creat¬ 
ing  it  is,  in  many  of  its  provisions,  unconstitutional;  he  may  not  unnaturally, 
therefore,  esteem  it  to  be  his  duty  to  restrain  and  obstruct,  to  the  utmost  of 
his  power,  the  operation  of  those  provisions  thus  deemed  by  him  to  be  un¬ 
constitutional.  He  is  of  opinion  that  the  existence  of  such  a  powerful 
mone}7ed  monopoly  is  dangerous  to  the  liberties  of  the  people.  It  would 
result  from  this  that  if,  in  the  discharge  of  his  official  duty,  he  is  to  follow 
no  guide  but  his  own  sense  of  the  interest  of  the  people,  he  might  feel  bound 
to  counteract  the  operations  of  this  dangerous  monopoly,  diminish  its  circu¬ 
lation,  curtail  its  means,  and  prejudice  its  credit.  To  accomplish  these  very 
purposes,  and  these  alone,  he  might  withdraw  the  deposites.  The  power 
given  him  by  Congress  would  thus  be  used  to  defeat  the  will  of  Congress  in 
one  of  its  most  important  acts,  by  discrediting,  and  otherwise  injuriously 
affecting  an  institution  which  Congress  has  seen  fit  to  establish,  and  which 
it  has  declared  shall  continue,  with  all  its  powers,  to  the  expiration  of  its 
charter. 

The  power  conferred  on  the  Secretary  is  a  trust  power,  and,  like  other  trust 
powers,  in  the  absence  of  express  terms  setting  forth  the  occasions  for  its 
exercise,  it  is  to  be  construed  according  to  the  subject  and  object  of  the  trust. 
h»s  in  other  cases  of  the  deposite  of  moneys  in  banks,  the  primary  object 
sought  to  be  accomplished  by  Congress,  by  that  provision  of  the  charter  now 
under  consideration,  is  the  safe  keeping  of  the  money.  The  Secretary’s 
trust,  therefore,  primarily  and  principally,  respects  this  safe  keeping.  But 
another  object  is  distinctly  disclosed  in  the  charter,  which  object  is  intimate¬ 
ly  connected  with  the  fund,  and  that  is,  its  transfer  and  exchange  from  place 
jO  place,  as  the  convenience  of  Government  might  require.  The  Secretary’s 
rust,  therefore,  respects  also  this  other  object  thus  connected  with  the  fund; 
tand  when  either  of  these  objects  requires  a  removal,  a  removal  becomes  a 
just  exercise  of  his  authority.  To  this  extent,  none  can  doubt  the  existence 
of  his  power.  If,  in  truth,  the  money  is  believed  to  be  unsafe,;  if,  in  truth, 
the  bank  will  not  grant  the  facilities  which  it  has  promised,  in  consideration 
of  receiving  and  holding  the  fund,  then,  certainly,  it  ought  to  be  removed. 
But  here  the  power  must  stop,  or  else  it  is  altogether  unbounded.  Here  is 
a  just  and  reasonable  limit,  consistent  with  the  character  of  the  power,  con¬ 
sistent  with  the  general  duties  of  the  Secretary,  and  consistent  with  the  na¬ 
ture  of  the  remedy  provided. 

The  charter  of  the  bank  is  the  law:  it  is  the  expressed  will  of  the  legisla¬ 
ture.  That  will  is,  that  the  bank  shall  exist,  with  all  its  powers,  to  the  end 
of  its  term.  That  will,  too,  as  the  committee  think,  is,  that  the  public  de¬ 
posites  shall  continue  in  the  bank  so  long  as  they  are  safe,  and  so  long  as 
the  bank  fulfils  all  its  duty  in  regard  to  them.  The  Secretary  assumes  a 


9 


C  72  ] 

broader  ground.  He  claims  a  right  to  judge  of  the  proceedings  of  the  bank 
on  all  subjects.  Admitting  the  fund  to  be  safe,  and  admitting  that  the  bank 
has  performed  all  its  duties  in  regard  to  it,  he  claims  an  authority,  neverthe¬ 
less,  to  remove  the  deposites  whenever  he  shall  form  an  opinion,  founded  on 
the  conduct  of  the  bank  in  any  particular  whatever,  and  however  uncon¬ 
nected  with  the  public  moneys,  that  the  general  interest  of  the  people  re¬ 
quires  such  removal.  If,  in  his  opinion,  it  discounts  too  little,  or  discounts 
too  much;  if  it  expands  or  contracts  its  circulation  too  fast  or  too  slow;  if  its 
committees  are  not  properly  organized;  if  it  claim  damages  on  protested  bills, 
which  it  ought  not  to  claim;  if,  in  his  opinion  still,  it  is  guilty  of  a  wrongful 
meddling  in  politics,  or  if  it  do  any  thing  else  not  consistent  with  his  sense 
of  the  public  interest,  he  has  a  right  to  visit  it  with  a  withdrawal  of  the  pub¬ 
lic  money  from  its  custody. 

If  this  claim  of  power  be  admitted,  it  would  seem  to  the  committee  to  be 
a  fair  result,  that  the  Secretary  has  power  to  withdraw  the  deposites  for 
no  other  reason  than  that  he  differs  with  Congress  upon  its  constitutional  au 
thority  to  create  any  bank,  or  upon  the  constitutionality  of  this  particular 
bank,  or  upon  the  utility  of  continuing  it  in  the  exercise  of  its  chartered 
powers  and  privileges,  till  its  term  shall  expire. 

The  committee,  therefore,  are  of  opinion  that  it  was  not  the  intention  of 
the  Legislature  to  give  to  the  Secretary  of  thfe  Treasury  a  general  guardian¬ 
ship  over  the  public  interests  in  all  matters  connected  with  the  bank;  but 
that  his  power  is  a  limited  one,  and  is  confined  to  the  safety,  and  the  proper 
management  of  that  portion  of  the  public  interest  to  which  it  expressly  re¬ 
lates;  that  is  to  say,  to  the  public  moneys  in  deposite  in  the  bank. 

But  the  extent  of  the  Secretary’s  discretion,  as  asserted  by  himself,  reaches 
even  farther  than  the  wide  range  which  the  committee  has  here  described. 
It  is  not  confined  to  the  protection  of  all  the  various  interests  which  the  Go¬ 
vernment  and  the  country  have  in  the  bank,  or  to  a  supervision  and  control 
over  all  the  conduct  of  the  bank,  but  it  embraces  all  branches  of  the  public 
interest,  and  touches  every  thing  which  in  any  way  respects  the  good  of  the 
people.  He  supposes  himself  rightfully  to  possess  the  power  of  removing 
the  deposites,  whenever  any  causes,  springing  up  in  any  part  of  the  whole 
wide  field  of  the  general  interest,  may  appear  to  him  to  call  for  such  re¬ 
moval.  Notwithstanding  he  may  suppose  all  the  great  interests  confided' to 
the  bank  to  be  perfectly  safe;  notwithstanding  he  may  have  no  occasion  to 
complain  of  any  part  of  its  conduct;  notwithstanding,  even,  it  may  so  have 
demeaned  itself  as  to  have  become  the  object  of  his  favor  and  regard;  yet,  if 
his  construction  be  admitted,  he  may  remove  the  deposites  simply  because 
he  may  be  of  opinion  that  he  might  place  them,  with  a  prospect  of  still  greater 
advantage,  in  other  hands.  If  he  be  of  opinion  that  the  commerce  of  the 
country,  or  its  manufactures,  would  be  benefited  by  withdrawing  the  public 
money  from  one  bank  and  placing  it  in  many,  that  would  be  an  exercise  of 
authority  entirely  within  the  limits  which  he  prescribes  to  himself.  It 
would  be  a  case  in  which  he  would  only  follow  his  own  sense  of  what  the 
general  interest  and  convenience  of  the  people  required.  He  might  think, 
too,  that  by  withdrawing  all  the  public  treasure  from  the  Bank  of  the  United 
States,  and  placing  it  in  the  hands  of  twenty  or  thirty  State  banks,  to  remain 
there  during  his  pleasure,  and  to  be  drawn  thence,  again,  at  his  will,  he  might 
be  enabled  effectually  to  advance  certain  other  objects  which,  whatever 
others  might  think  of  them,  he  might  consider  to  be  essential  to  the  good  ot 
the  people.  All  this,  ifche  be  right,  is  within  his  just  authority.  A  power. 

2 


in 


[72  j 

necessarily  running  to  this  extent,  is  a  power,  in  the  opinion  of  the  commit¬ 
tee,  which  can  never  be  admitted. 

Having  thus  expressed  an  opinion  upon  the  general  extent  of  the  power 
claimed  by  the  Secretary,  the  committee  proceed  to  consider  the  reasons 
which  he  has  reported  to  Congress  as  the  particular  grounds  on  which  the 
power  has  been  exercised  in  the  present  case. 

The  first  reason  assigned  by  the  Secretary,  is  the  near  approach  of  the 
period  when  the  bank  charter  will  expire.  That  period  is  the  4th  of  March, 
1836,  more  than  two  years  distant;  nearly  two  years  and  a  half  at  the  time 
of  the  removal.  Three  sessions  of  Congress  are,  in  the  mean  time,  to  be 
holden,  and  inasmuch  as  the  Secretary  himself  says  that  “the  power  over 
the  place  of  the  deposites  for  the  public  money  would  seem  properly  to  be¬ 
long  to  the  legislative  department  of  Government, 99  the  committee  think 
it  might  reasonably  have  been  expected  by  him  that  Congress  would  not 
fail  to  make,  in  season,  suitable  regulations  on  a  subject  thus  admitted  to 
be  within  the  just  exercise  of  its  authorit}^,  and  properly  one  of  its  duties. 

Why,  then,  should  he  not  have  waited  till  Congress  had  seen  fit  to  act  upon 
the  subject,  or  had  manifested  a  disposition  not  to  act?  The  matter  of  the 
deposites  had  been  before  Congress  last  session,  and  Congress  had  then 
thought  no  provision  to  be,  as  yet,  necessary.  Its  undoubted  sense  was, 
that  the  public  moneys  should  remain  where  they  were.  This  was  manifest¬ 
ed  by  proofs  too  clear  to  be  questioned.  Another  session  was  fast  ap¬ 
proaching;  and  why  was  not  the  whole  subject  left  where  Congress  had 
chosen  to  leave  it  at  the  end  of  its  last  session,  to  await  the  free  exercise  of 
its  legislative  power  at  this  session?  It  might  have  been  fit  for  the  Execu¬ 
tive  to  call  the  attention  of  Congress,  at  this  time,  to  the  necessity  of  some  • 
legal  provisions  respecting  the  future  custody  of  the  public  moneys;  and  it 
would,  doubtless,  have  been  proper  for  Congress,  without  such  call,  to  take 
up  and  consider  the  subject  at  its  own  suggestion;  but  the  committee  see  no 
reason  whatever,  in  the  approaching  expiration  of  the  charter,  for  a  change 
so  sudden,  and  producing  such  important  effects,  made  so  long  before  that 
expiration,  at  a  time  when  Congress  had  recently  had  the  subject  before  it, 
and  when,  too,  it  was  again  about  to  assemble,  and  would  naturally  have 
reasonable  and  full  opportunity  to  adopt  any  necessary  legislative  provi¬ 
sions.  * 

The  Secretary  has  stated  no  reason  satisfactory  to  the  committee  for  not 
deferring  this  important  step  until  the  meeting  of  Congress.  He  sets 
forth  no  emergency,  no  sudden  occasion,  nothing  which,  in  their  judgment, 
made  immediate  action  by  him  necessary. 

The  Secretary  supposes  it  to  have  been  his  duty  to  act  on  the  belief  that 
the  bank  charter  would  not  be  renewed;  and  he  refers  to  recent  popular  elec¬ 
tions  in  support  of  this  opinion.  The  committee  believe  it  altogether  unu¬ 
sual  for  reasons  of  that  kind  to  be  assigned  for  public  and  official  acts.  On 
such  subjects,  opinions  may  be  very  various.  Different  and  opposite  con¬ 
clusions  may  be  drawn  from  the  same  facts  by  different  persons.  One  man 
may  think  that  a  candidate  has  been  elected  on  account  of  his  opposition  to 
the  bank;  another  may  see,  only,  that  he  lias  been  chosen,  notwithstanding 
such  opposition.  One  may  regard  the  opposition,  or  the  support,  of  any  mea¬ 
sure,  by  a  particular  candidate,  as  having  been,  itself,  a  promoting  cause  of 
the  success  of  his  election;  another  may  esteem  it  as  a  formidable  objection, 
overcome,  however,  by  more  powerful  reasons;  and  others,  again,  may  be 
of  opinion  that  it  produced  little  or  no  effect  on ‘the  one  side  or  the  other. 


11 


[  72  ] 

But  if  inferences,  less  uncertain,  could  be  drawn  from  such  occurrences,  the 
committee  still  think,  that  fora  public  officer  to  presume  what  law  the  Le¬ 
gislature  will  or  will  not  pass,  respecting  matters  of  finance,  from  the  elec¬ 
tion  of  a  particular  person  to  he  Chief  Magistrate,  implies  a  consequence  from 
such  election  which  the  constitutional  independence  and  dignity  of  the  Le¬ 
gislature  do  not  allow  to  he  admitted. 

But  if  for  this,  or  other  reasons,  the  Secretary  had  persuaded  himself  that 
the  charter  of  the  bank  would  not  be  renewed,  still,  it  certainly  did  not  fol¬ 
low  that  the  deposites  ought  to  be  removed  before  Congress  had  decided  on 
the  hands  into  which  they  should  be  transferred,  and  had  made  suitable  ~e- 
gulation  respecting  their  future  custody.  If  there  were  good  ground  lor 
thinking  that  Congress  would  not  recharter  the  bank,  for  that  very  reason 
there  was  equally  good  ground  for  supposing  that  it  would  make  proper  and 
seasonable  provision  for  the  keeping  of  the  public  moneys  elsewhere.  How 
could  the  Secretary  doubt  that  Congress  would  omit  to  do  that  which  he 
avers  to  be  one  of  its  appropriate  duties?  The  question  is,  not  what  mea¬ 
sures  Congress  might  be  expected  to  adopt — whether  the  rechartering  of  the 
bank,  or  what  other  measures;  but  whether  it  ought  not  to  have  been  pre¬ 
sumed  that  it  would  adopt  some  measure,  and  that  a  seasonable  and  proper 
one,  according  to  its  power  and  its  duties;  and  whether,  therefore,  this  an¬ 
ticipation  of  the  action  of  Congress,  on  the  eve  of  its  session,  is  to  be  jus 
tified. 

The  bank  charter  declares  that  the  deposites  of  the  public  money  shall  be 
made  in  the  bank  and  its  offices  and  that  the  bank  shall  continue  till  March, 
1S36.  Where  does  the  Secretary  find  his  power  to  decide  that  the  deposites 
shall  be  so  made  but  for  seventeen  years  from  the  date  of  the  charter,  instead 
of  twenty?  If  he  may  thus  withdraw  the  deposites  two  or  three  years  be¬ 
fore  the  expiration  of  the  charter,  what  should  restrain  him  from  exercising 
the  same  authority  five  years  before  its  expiration,  or  ten  years?  A  plain  and 
cogent  necessity,  the  existence  of  a  case  which  admits  of  no  reasonable  doubt, 
and  which  is  too  urgent  for  delay  till  Congress  can  provide  for  it,  can  alone 
justify  an  interfererce  with  the  public  moneys,  lodged  in  the  bank  by  law 
for  the  double  purpose  of  safe  keeping,  and  fulfilment  of  solemn  contract. 

But  supposing  it  not  reasonable  for  the  Secretary  to  have  expected  the  in¬ 
terposition  of  Congress,  and  admitting  that  he  might  consider  the  withdraw¬ 
ing  of  the  deposites  as  an  act  which  was  to  be  done,  at  some  time,  by  him¬ 
self,  how  can  it,  nevertheless,  be  argued,  that  so  early  and  so  sudden  a  with¬ 
drawal  was  necessary?  The  committee  can  perceive  no  possible  reason  for 
this,  in  any  state  of  facts  made  known  to  them. 

The  withdrawal  of  the  money,  left  on  deposite,  from  a  bank  whose  char¬ 
ter  is  about  to  expire,  is  naturally  one  of  the  things  longest  postponed.  It 
is  as  safe  the  last  day  of  the  existence  of  the  bank,  in  common  cases,  as  at 
any  previous  period.  The  bank  expects  the  recal  of  its  deposites,  near  the 
period  of  its  expiration,  and  prepares  itself  accordingly.  The  operation,  if 
made  gradually,  produces,  when  thus  conducted,  the  least  possible  disturb¬ 
ance  in  the  business  of  the  community.  Former  experience  would  seem  to 
have  held  out  a  salutary  light  for  the!  guidance  of  the  Secretary  in  this 
part  of  his  official  duty. 

At  the  time  of  the  expiration  of  the  charter  of  the  former  bank,  Mr 
Gallatin  was  Secretary  of  the  Treasury,  and  the  public  deposites  were  in 
the  bank.  The  charter  of  the  bank  was  to  end  on  the  4th  of  March,  1811, 
and  it  does  not  appear  that  Mr.  Gallatin  thought  it  necessary  to  make  any 
provision  whatever  for  removing  any  part  of  the  deposites,  except  by  draw- 


[  72  ]  12 

ng  on  them  for  the  common  uses  of  Government,  until  late  in  the  very 
month  preceding  the  expiration  of  the  charter.  A  large  amount  of  those 
deposites  remained,  indeed,  in  the  vaults  of  the  bank  after  the  charter  had 
expired,  and  until  they  were  wanted,  in  the  general  operations  of  the  Trea 
sury.  And  why  should  it  be  otherwise?  Why  should  that  be  done  sud- . 
denly  now,  which  the  Secretary  thinks  could  not  be  done  suddenly  here¬ 
after  without  great  inconvenience?  Is  it  not  the  just  inference,  from  his 
«s»wn  argument,  that  the  thing  should  not  have  been  done  suddenly  at  all? 
As  to  the  idea  that  the  credit  of  the  paper  of  the  bank  will  be  depreciated 
near  the  time  of  the  expiration  of  its  charter,  or  that  it  would  be  inconve¬ 
nient  for  it,  at  that  time,  to  be  called  on  for  the  deposites,  the  committee 
are  utterly  at  loss  to  see  the  slightest  foundation  for  such  an  opinion.  Ex¬ 
perience  is  against  it;  and  all  reason,  as  the  committee  think,  is  against  it 
also.  There  is  nothing  to  render  it  in  any  degree  doubtful  that  the  hills  of 
the  bank  will  be  in  as  good  credit  the  last  day  of  its  charter,  and  even  after 
that  time,  if  any  shall  be  outstanding,  as  they  are  now;  and  there  is  as  little 
to  render  it  doubtful  that  then,  as  now,  the  bank  would  be  competent  to 
answer  all  demands  upon  it.  In  the  opinion  of  the  committee,  the  with¬ 
drawal  of  the  fund  wras  both  unnecessarily  early,  and  unnecessarily  sudden. 
It  might  have  been  made  gradual;  it  might  have  been  deferred;  and  it  might 
have  been,  and  ought  to  have  been,  as  the  committee  think,  not  ventured 
upon  at  all,  until  the  attention  of  Congress  itself  had  been  called  to  the  sub¬ 
ject.  The  committee  therefore  entirely  dissent  from  this  first  reason,  re¬ 
ported  by  the  Secretary.  They  see  nothing  which  proves  to  them  the 
existence  of  the  slightest  occasion  for  taking  this  important  step,  at  the 
moment  it  wras  taken.  So  far  as  it  depends  on  this  reason,  the  committee 
think  the  removal  was  made  without  necessity,  without  caution  or  prepara¬ 
tion,  with  a  suddenness  naturally  producing  mischievous  consequences,  and 
in  unjustifiable  anticipation  of  the  legislation  of  Congress. 

But  the  Secretary  thinks  there  are  other  reasons  for  the  removal,  grow¬ 
ing  out  of  the  manner  in  which  the  affairs  of  the  bank  have  been  managed, 
and  its  money  applied,  which  would  have  made  it  his  duty  to  withdraw  the 
deposites  at  any  period  of  the  charter. 

Of  these  reasons,  thus  arising  from  the  alleged  misconduct  of  the  bank, 
the  first  is,  that  many  important  money  transactions  of  the  bank-  are  placed 
under  the  control  of  a  Committee  of  Exchange,  of  which  committee,  no  one 
of  the  public  directors,  as  they  are  called,  is  allowed  to  be  a  member,  instead 
ot  being  transacted  by  aboard  of  seven  directors. 

This  charge  consists  of  two  parts;  first,  that  the  discounts  of  bills  are  made 
by  a  committee,  and  not  by  a  quorum  of  the  board:  second,  that  the  pub¬ 
lic  directors  are  not  allowed  to  be  of  this  committee. 

First.  It  is  not  alleged  that,  in  the  discounts  of  bills  by  this  committee, 
any  indiscretion  has  been  committed,  or  any  loss  incurred;  or  that,  in  conse¬ 
quence  thereof,  any  facility  to  the  mercantile  community  has  been  withheld, 
or  any  duty  of  the  bank  to  the  Government  violated.  The  objection  is,  sim¬ 
ply,  that  bills  are  discounted  by  a  committee.  Supposing  this  to  be  an  irre¬ 
gularity,  or  illegality,  in  the  proceedings  of  the  board,  how  is  it  to  be  cor¬ 
rected  by  withdrawing  the  deposites?  What  connexion  is  there  between 
the  tw’o  things?  It  is  not  pretended  that  this  mode  of  discounting  bills  en¬ 
dangered  the  deposites;  it  is  not  pretended  that  it  made  the  bank  either  less 
able,  or  less  willing,  to  perform  every  one  of  its  duties  to  Government. 
How  should  the  withdrawal  of  the  deposites  then  be  suggested  by  the  dis¬ 
covery  of  such  an  irregularity,  real  or  supposed?  The  committee  are  noli 


13 


[  72  ] 

able  to  perceive  the  least  propriety  in  applying  the  power  of  removal  to  a 
proceeding  of  this  kind,  even  if  it  were  admitted  to  be  irregular  or  illegal. 
But  is  the  practice  illegal?  It  is  believed  to  be  not  at  all  unusual.  It  is  be¬ 
lieved  to  be  quite  common,  in  banks  of  large  business,  for  hills  of  exchange, 
which  are  presented  every  day,  and  almost  every  hour  in  the  day,  to  be  dis¬ 
counted  either  by  a  committee  of  the  directors,  or  by  the  president,  or  even 
other  officers,  acting  under  such  general  orders  and  instructions  as  the  direc¬ 
tors,  at  their  stated  meetings,  prescribe.  A  large  board  of  directors  cannot 
assemble  every  day,  perhaps  not  oftener  than  twice  a  week.  If  bills  of  ex¬ 
change  could  only  be  discounted  at  these  periodical  meetings,  the  business 
of  exchange  could  not  go  on  with  the  promptitude  and  despatch  so  impor¬ 
tant  to  commercial  men  in  such  transactions. 

The  committee  suppose  the  truth  of  these  remarks  will  be  at  once  admit¬ 
ted  by  all  who  have  knowledge  of  business  of  this  kind. 

The  general  management  and  control,  the  authority  of  examining  and  su¬ 
pervising,  of  contracting  or  enlarging  the  amount  of  daily  discounts,  accord¬ 
ing  to  the  state  of  the  bank,  and  of  giving  every  other  order  and  direction 
on  the  subject,  still  remains  with  the  directors,  and  is  constantly  exercised 
by  them.  They  still  manage  the  affairs  of  the  bank,  in  the  language  of  the 
charter,  although  they  may  depute  to  a  committee  the  authority  of  inquiring 
and  deciding  upon  the  credit  of  persons  whose  names  are  on  bills  of  ex¬ 
change  offered  for  discount,  and  on  the  rate  of  exchange,  current  at  the  day. 
The  legal  question  would  be,  whether  the  directors,  by  rule  or  by  law,  may 
not  authorize  a  small  number  of  their  own  board  to  discount  bills.  The 
bank  has  been  advised  that  it  might  rightfully  do  this;  and  if  it  be  not  clear 
that  this  opinion  is  right,  it  is  certainly  far  from  clear  that  it  is  wrong;  and 
in  this  state  of  the  question,  the  general  practice  of  other  banks,  under  sim¬ 
ilar  provisions  in  their  charters,  may  well  relieve  the  directors  from  the  im¬ 
putation  of  intentional  mismanagement. 

If,  in  all  this,  the  bank  has  violated  its  charter,  what  other  banks  of  ex¬ 
tensive  business  have  not  done  the  same  thing? 

But  the  other  subject  of  complaint,  and  that  which  seems  to  be  regarded 
as  the  more  offensive  part  of  this  regulation,  is,  that  the  public  directors,  as 
they  are  called,  were  not  allowed  to  be  on  this  committee. 

It  may  be  observed,  in  the  first  place,  that  if  the  discounting  of  bills  of 
exchange  by  a  committee,  instead  of  the  whole  board  of  directors,  be  ille¬ 
gal,  it  would  hardly  be  rendered  legal  by  placing  any  or  all  of  these  public 
directors  on  the  committee  as  members.  But  the  Secretary  seems  to  sup¬ 
pose  that  there  was  some  particular  object  in  this  exclusion  of  these  direc¬ 
tors,  as  if  there  had  been  something  wrong  to  be  done,  and  therefore  se- 
•crets  to  be  kept  by  this  committee.  It  is  not  easy  to  see  what  foundation 
there  can  be  for  this  opinion.  All  those  discounts  are  matter  of  record. 
They  appear  every  day  in  the  books  of  the  bank.  Every  director,  on  or 
off  the  committee,  sees  them,  or  may  see  them,  at  pleasure.  There  is  no 
secrecy,  nor  any  motive  for  secrecy,  so  far  as  this  committee  can  perceive. 
Very  proper  causes  may  have  existed,  for  aught  that  can  be  known  by  the 
Senate  for  the  omission  of  these  particular  directors  from  this  particular 
committee.  Their  services  might  have  been  deemed  more  useful  in  other 
committees;  or  however  respectable  in  general  character,  or  however  useful 
in  other  parts  of  the  direction,  they  may  have  been  esteemed  not  so  well 
acquainted  as  others  with  the  business  of  foreign  or  domestic  exchange. 
And  even  if  there  were,  or  are,  other  causes  for  the  omission,  such  as  tend 

t 


14 


[  72  ] 

less  to  prove  the  existence  of  that  harmony  and  mutual  respect  which  it  is 
so  desirable  should  pievail  in  such  a  board,  these  causes  cannot  furnish  any 
just  ground  for  asserting,  either  that  the  business  of  exchange  was  illegally 
conducted,  or  that  the  constitution  of  the  committee  was  proof  of  the  exis¬ 
tence  of  any  motive  not  fit  to  be  avowed. 

But  the  Secretary  entertains  an  opinion  respecting  the  character  and  duties 
of  the  directors  appointed  by  the  President  and  Senate,  in  which  the  com¬ 
mittee  do  not  concur.  He  denominates  them  “  public  directors, 99  “  offi¬ 
cers  of  the  Government,”  &c. 

By  the  charter  of  the  bank  there  are  to  be  twenty-five  directors.  Of 
these,  twenty  are  to  be  chosen  by  the  individual  stockholders,  and  five  ap¬ 
pointed  by  the  President,  with  the  advice  and  consent  of  the  Senate.  As 
the  Government  owned  one  fifth  of  the  stock  of  the  bank,  it  was  judged 
expedient  to  place  in  the  hands  of  the  President  and  Senate  the  appoint¬ 
ment  of  one-fifth  of  all  the  directors.  But  they  are  not  called  public  direc¬ 
tors,  nor  officers  of  the  Government,  nor  public  agents;  nor  are  they 
entitled,  so  far  as  the  committee  can  perceive,  to  either  of  these  appella¬ 
tions,  any  more  than  the  other  directors.  The  whole  twenty-five  directors 
are  j  oint  managers  of  a  joint  fund,  each  possessing  precisely  the  same 
powers,  and  charged  with  the  same  duties  as  every  other.  They  derive 
their  ippointments,  it  is  true,  from  different  origins,  but,  when  appointed, 
their  authority  is  the  same.  There  is  not  one  word  in  the  charter  intimat¬ 
ing,  in  the  remotest  manner,  that  the  five  directors  appointed  by  the  Presi¬ 
dent  and  Senate  have  any  particular  duty,  or  are  the  objects  of  any  peculiar 
trust.  The  charter  calls  them  not  Government  directors,  not  public  direc¬ 
tors,  but  simply  the  directors  appointed  by  the  President  and  Senate.  They 
are  placed  in  the  direction  to  consult  with  the  other  directors  for  the  com¬ 
mon  good  of  the  bank,  and  to  act  with  these  others,  and  vote  vyith  them  ont 
all  questions.  They  are,  what  the  law  calls  them,  directors  of  the  bank, 
not  agents  of  the  Government.  They  are  joint  trustees  with  others  in  a 
joint  merest.  If  any  thing  illegal  or  improper  takes  place  in  the  board, 
they  are  bound  to  resist  it  by  the  duty  which  they  owe  the  individual  stock¬ 
holders,  as  much  as  by  the  duty  they  owe  the  Government;  because  they 
are  agents  of  the  individual  stockholders,  and  have  the  same  authority  to 
bind  them  by  their  acts  as  to  bind’  the  Government;  and,  in  like  manner, 
it  is  the  duty  of  those  directors  who  are  appointed  by  the  individual  stock¬ 
holders  to  give  notice,  as  well  to  Government  as  to  the  stockholders,  if  any 
thing  illegal  take  place,  or  be  threatened.  All  those  directors  act  and  vote 
together  on  the  smallest  as  well  as  on  the  highest  occasions;  and,  by  their 
joint  votes,  bind  the  corporation,  and  bind  both  the  Government  and  indi¬ 
vidual  stockholders  to  the  extent  of  their  respective  interests  in  the  corpo-^ 
ration. 

If  the  directors  appointed  by  the  President  and  Senate  had  been  excluded 
by  the  charter  from  any  pari  of  the  power  exercised  by  the  others;  if  it  had 
been  forbidden  them  to  interfere,  to  the  same  extent,  and  with  the  same 
effect,  as  the  rest  in  the  common  business  of  the  bank,  there  might  be  some 
reason  for  supposing  that  an  uncommon  character — a  character  not  so  much 
of  action  as  of  supervision  and  inspection,  was  intended  to  be  conferred  on 
them  But  they  do  interfere,  and  justly,  in  all  transactions  of  .the  bank. 
They  do  vote  and  act  on  all  subjects  like  the  other  directors.  Being,  then, 
possessed  of  this  common  character  of  directors,  and  enjoying  all  its  powers 

lie  J  blest  extent,  the  committee  know  no  form  of  argument  by  which  an 


15  r  72  J 

•  * 

uncommon  and  extraordinary  character  is  to  be  raised  by  construction,  and 
superaddcd  to  the  common  character  of  directors  which  thus  already  belongs 
to  them. 

By  granting  the  charter,  and  by  accepting  it,  the  Government  on  the  one 
hand,  and  the  individual  stockholders  on  the  other,  have  agreed  that,  of  the 
directors,  as  joint  agents  of  all  parties,  the  stockholders  shall  appoint  twenty, 
and  the  Government  five.  The  interest  of  all  parties  is  confided  to  this 
joint  agency:  and  any  distinctionin  their  powers,  as  arising  from  their  differ¬ 
ent  modes  of  appointment,  is,  in  the  judgment  of  the  committee,  not  to  be 
sustained.  They  regard  such  distinction  as  entirely  inconsistent  with  the  na¬ 
ture  of  the  agency  created,  and  as  deriving  not  the  least  countenance  from 
any  thing  contained  in  the  law. 

The  committee,  nevertheless,  to  avoid  misapprehension,  wish  to  repeat, 
that  it  is  undoubtedly  the  duty  of  the  directors  appointed  by  the  President, 
and  of  all  other  directors,  to  give  notice,  both  to  Government  and  the  stock¬ 
holders,  of  any  violation  of  the  charter  committed  or  threatened. 

The  Secretary  of  the  Treasury  has  thought  proper  to  observe  that  the 
measures  of  the  committee  of  exchange  are,  as  it  appears,  designedly,  and 
by  system,  so  arranged  as  to  conceal  from  the  officers  of  the  Government 
transactions  in  which  the  public  are  deeply  involved.  This,  it  must  be  ad¬ 
mitted,  is  a  very  serious  charge.  It  imputes  a  corrupt  motive.  The  com¬ 
mittee  have  sought  for  the  foundation,  either  in  evidence  or  argument,  on 
which  this  charge  rests.  They  have  found  neither.  They  find  only  the 
charge,  in  the  first  place;  and  then  they  find  the  charge  immediately  stated 
as  a  fact,  and  relied  on  as  the  basis  of  other  charges. 

The  second  reason  specially  reported  by  the  Secretary  as  arising  from 
the  conduct  of  the  bank,  respects  the  bill  of  exchange  drawn  by  the  Secre¬ 
tary  of  the  Treasury  on  the  Government  of  France,  and  purchased  by  the 
bank. 

The  general  facts  connected  with  this  case,  are  these: 

By  the  late  treaty  of  indemnity  between  the  United  States  and  France, 
it  was  stipulated  that  the  French  Government  should  pay  to  that  of  the 
United  States  twenty-five  millions  of  francs,  to  he  distributed  among  those 
American  citizens  who  had  claims  against  France  for  the  unlawful  seizure, 
capture,  and  condemnation  of  their  vessels  and  property;  the  whole  sum  ta 
be  paid  in  annual  instalments  of  four  millions  one  hundred  and  sixty-six 
thousand  six  hundred  and  sixty-six  francs  each,  into  the  hands  of  such  per¬ 
sons  as  shall  be  authorized  by  the  Government  of  the  United  States  to  re¬ 
ceive  it — the  first  instalment  to  be  paid  at  the  expiration  of  one  year  next 
following  the  exchange  of  the  ratification. 

On  the  expiration  of  the  year,  the  Secretary  drew  a  bill  of  exchange, 
signed  by  himself  as  Secretary,  on  the  French  Government  for  the  amount 
•f  this  instalment,  and  sold  it  to  the  bank,  like  any  other  bill  of  exchange, 
and  received  the  proceeds  by  credit  of  the  amount  to  the  account  of  the 
Tresurer  in  the  bank. 

On  presentment  of  this  bill  at  the  French  Treasury  payment  was  refused; 
the  bill  was  accordingly  duly  protested,  and  it  was  taken  up  by  a  third 
person  for  account  of  the  bank.  The  damages  accruing  on  this  bill,  accord¬ 
ing  to  law  and  to  constant  usage  in  such  cases,  are  one  hundred  and  fifty- 
eight  thousand  dollars. 

Jf  this  bill  had  been  transferred  by  the  bank,  as  probably  it  was,  the  bank 
itself  would  have  been  answerable  for  damages  even  at  a  higher  rate,  if  a 
third  person  had  not  taken  up  the  bill  for  the  honor  of  the  bank. 


16 


[  72  ] 

# 

On  receiving  information  of  the  protest  ot  the  bill,  the  officers  of  the 
bank,  as  was  their  duty,  gave  immediate  notice  to  the  Treasury  Department, 
and  accompanied  that  notice  with  the  information,  always  given  in  such 
cases,  that  the  drawers  of  the  bill  would  be  held  answerable  for  the  da¬ 
mages.  Such  is  the  substance  of  the  facts  in  this  case. 

The  bank,  it  would  appear,  was  willing  to  collect  the  bill  on  account  of 
Government,  and  to  credit  the  Treasury  with  the  proceeds  when  received  ; 
a  course  of  proceeding  which  had  this  to  recommend  it,  that  the*money  to 
be  received  on  the  bill  was  to  be  received  by  the  Government  simply  in 
trust  for  claimants  under  the  French  treaty,  and  was  not  ultimately  destin¬ 
ed  to  the  ordinary  uses  of  the  Treasury.  On  the  contrary,  indeed  before 
»  the  dishonor  of  the  bill  was  known,  it  had  been  made,  already,  the  legal 
duty  of  the  Secretary  to  place  the  fund,  so  soon  as  received,  at  interest  for  the 
benefit  of  the  claimants. 

But  it  was  thought  best  to  sell  the  bill,  and  to  realize  at  once  its  amount 
into  the  Treasury;  and  the  bill  was  sold  to  the  bank  in  preference  to  others 
offering  to  purchase,  for  no  reason,  it  is  to  be  presumed,  except  that  the 
terms  of  the  bank  were  more  satisfactory.  The  bill  was  thus  purchased  by 
the  bank,  and  its  proceeds  credited  to  the  Treasury.  This  was  a  mere  trans¬ 
action  of  the  purchase  and  sale  of  a  bill  of  exchange.  There  was  wo  trust 
confided  to  the  bank,  and  no  fiscal  agency  in  the  whole  matter.  Indeed  the 
agency  of  the  bank  had  been  declined,  the  Secretary  preferring  to  deal  with 
it  not  as  an  agent,  but  as  a  purchaser,  proposing  to  it  not  to  collect  the  bill, 
but  to  buy  it.  On  being  remitted  to  Europe,  and  presented  for  payment, 
the  bill  was  protested.  By  the  universal  commercial  law,  the  Government, 
on  the  occurrence  of  this  protest,  became  amenable  to  the. bank  for  the 
amount  of  the  bill,  with  damages.  These  damages  may  be  ultimately  claimed, 
with  justice,  from  the  French  Government,  if  the  bill  was  drawn  upon  suffi¬ 
cient  grounds,  and  on  proper  authority;  in  other  words,  if  the  obligation  of 
the  French  Government  was  such  that  it  was  bound  to  accept  and  pay  the 
bill;  but  unless  there  be  something  in  the  case  to  vary  the  general  rule,  which 
the  committee  do  not  perceive,  these  damages  were  part  of  the  debt  which 
had  become  due  to  the  bank,  as  much  as  the  principal  sum  of  the  bill.  If 
this  be  so,  how  could  the  directors  relinquish  this  part  of  the  debt  any  more 
than  the  other?  They  are  agents  for  the  corporation;  they  act  as  trustees, 
and  have  no  authority,  without  consideration,  to  release,  either  to  the  Go¬ 
vernment  or  to  individuals,  debts  due,  or  properly  belonging  to  the  corpo¬ 
ration. 

It  has  been  suggested  that  the  bank  should  have  taken  up  this  bill,  when 
protested,  on  Government  account.  Two  answers  may  be  given  to  this  sug¬ 
gestion:  the  first  is,  that  the  bill  had  been  taken  up  by  a  correspondent  abroad 
for  account  of  the  bank,  before  it  was  known  in  the  United  States  that  it  had 
been  protested.  The  second  is,  that  it  would  have  been  unlawful  for  the 
bank  to  have  advanced  such  amount  to  the  Government,  or  on  account  of 
Government,  for  the  purpose  of  taking  up  this  bill,  or  for  any  other  purpose, 
without  an  act  of  Congress.  The  express  words  of  the  charter  forbid  it. 

But,  as  a  reason  for  removing  the  deposites,  it  appears  to  the  committee 
quite  immaterial  whether  the  bank  be  right  or  wrong  in  claiming  these  dam¬ 
ages.  If  wrong,  it.  will  not  recover  them.  It  is  not  judge  of  its  own  rights; 
and  if  the  appropriate  tribunals  shall  decide  that  the  bank  was  acting  on  this 
occasion,  or  ought  to  have  acted,  as  the  agent  of  Government,  or  that  it 
was  its  duty  to  take  up  the  bill  on  account  of  Government,  then  the  darn- 


17 


[  VI  ] 


.aces  will  not  be  awarded  to  it  And  in  the  worst  aspect  of  this  case,  how 
can  its  conduct,  in  this  respect,  be  any  possible  reason  to  justify  the  removal 
of  the  deposites?  What  connexion  has  this  occurrence  with  the  safe  keep¬ 
ing  of  the  public  treasures,  or  with  the  remitting  them  from  place  to  place, 
to  meet  the  convenience  of  Government,  according  to  the  duty  of  the  bank 
under  the  charter?  The  bank  thinks  itself  entitled  to  damages  on  a  protested 
bill  purchased  and  held  by  itself,  and  drawn  by  Government.  The  Secre¬ 
tary  of  the  Treasury  thinks  otherwise.  If  there  be  no  reason  to  doubt  the 
sincerity  of  the  Secretary’s  conviction,  there  is  as  little  to  doubt  the  sincerity 
of  that  entertained  by  the  bank;  and  it  is  quite  inconceivable  to  the  commit¬ 
tee  that  the  pendancy  of  such  a  difference  of  opinion,  on  such  a  question, 
should  furnish  any  reason  whatever  for  withdrawing  the  deposites,  unless  it 
be  at  once  admitted  that  the  Secretary  holds  the  power  of  removal  as  a  per¬ 
fectly  arbitrary  power,  and  may  exercise  it,  by  way  of  punishment,  when¬ 
ever,  in  any  particular,  the  conduct  or  the  opinions  of  the  bank  do  not  con¬ 
form  to  his  pleasure. 

The  Secretary  does  not  argue  this  matter.  He  offers  no  reason  in  oppo¬ 
sition  to  the  legal  right  of  the  bank  to  the  damages  claimed.  Indeed,  he 
hardly  denies  the  right.  He  commences  his  observations  on  the  subject  by 
saying  that  the  ruling  principle  of  the  bank  is  its  own  interest;  and  closes 
them  with  another  declaration,  that,  as  fiscal  agent  of  the  public,  it  availed 
itself  of  the  disappointment  of  its  principal  for  the  purpose  of  enlarging  its 
own  profits. 

Assertions  like  these,  however  else  they  may  be  disposed  of,  cannot  be 
made  subjects  of  argument. 

The  last  charge  preferred  against  the  bank,  is,  that  it  has  used  its  means 
with  a  view  to  obtain  political  power,  and  thereby  secure  the  renewal  of  its 

charter. 

The  very  statement  of  such  a  charge,  as  a  reason  for  removing  the  depo¬ 
sites,  is  calculated  to  excite  distrust  in  the  wisdom  and  propriety  of  that 
measure;  because  the  charge,  too  general  to  be  proved,  is  too  general,  also, 
to  be  disproved;  and  since  it  must  always  rest  mainly  on  mere  opinion,  it 
might  be  made  at  any  time,  by  any  Secretary,  against  any  bank.  It  would 
be,  therefore,  always  a  convenient  cloak  under  which  to  disguise  the  true 
motives  of  official  conduct. 

If  proof  be  made  out  that  the  funds  of  the  bank  have  been  applied  to 
illegal  objects,  the  proper  mode  of  redress  and  punishment  should  have  been 
adopted;  but  what  has  this  to  do  with  the  deposites?  As  in  the  case  of  the 
French  bill,  the  Secretary  cannot  justify  the  removal  of  the  deposites  on 
any  such  ground  as  this,  unless  it  be  conceded  that  he  may  use  the  power  of 
removal  as  a  punishment  for  any  offence,  of  any  kind,  which  the  bank,  in 
his  opinion,  may  have  committed.  The  committee  have  already  expressed 
the  opinion  that  no  such  latitude  of  power  belongs  to  him;  and  the  assertion 
of  such  a  power,  for  such  a  cause  as  is  now  under  consideration,  shows  that 
the  power  ought  never  to  belong  to  any  Secretary;  because  the  offence,  on 
account  of  which  it  is  here  proposed  to  be  exercised,  is  a  political  offence, 
incapable  of  definition,  depending  merely  on  the  Secretary’s  opinion,  and 
necessarily  drawing  into  its  consideration  all  the  exciting  controverted  topics 
of  the  day.  The  bank,  it  is  said,  “has  sought  to  obtain  political  power.” 
What  is  the  definition  of  snch  an  offence  as  this?  What  acts  constitute  it? 
How  is  it  to  be  tried?  Who  is  to  be  the  judge?  What  punishment  shall 
follow  conviction?  All  must  see  that  charges  of  this  nature  are  but  loose 
3 


[  7*  ] 


IS 


and  vague  accusations,  which  may  be  made  at  any  time,  and  can  never  be 
either  proved  or  disproved;  and  to  admit  them  as  sufficient  grounds  to  justify 
the  removal  of  the  deposites,  would  be  to  concede  to  the  Secretary  the  pos¬ 
session  of  a  power  purely  arbitrary. 

The  main  fact  relied  on  for  this  cause  of  removal  shows  how  extremely 
unsafe  all  proceedings  on  any  such  reasons  must  be.  That  main  fact  is,  that, 
between  December,  1830,  and  December,  1  S3 1 ,  the  bank  extended  its  loans 
twenty  millions  of  dollars:  and  it  is  further  alleged  that,  as  if  to  leave  no 
doubt  of  the  motive  of  this  extraordinary  conduct,  it  continued  to  add  rapid- 
ly  to  its  loans,  until  in  May,  lo32,  while  its  petition  for  renewal  was  pend¬ 
ing,  those  loans  amounted  to  seventy  millions.  And  the  Secretary  declares 
that  this  extraordinary  increase  of  loans  made  in  so  short  a  space  of  time, 
and  on  the  eve  of  a  contested  election  in  which  the  bank  took  an  open  and 
direct  interest,  demonstrates  that  it  was  using  its  money  to  obtain  a  hold 
upon  the  people  of  the  country,  to  induce  them,  by  the  apprehension  of 
ruin,  to  vote  against  the  candidate  whom  it  desired  to  defeat.  This  is  strong 
assertion,  but,  so  far  as  the  committee  perceive,  it  is  assertion  merely.  It  is 
but  the  Secretary’s  own  inference  from  facts,  from  which  very  facts  his 
predecessors  in  office  have  drawn  no  such  conclusions. 

This  great  extension  of  the  loans,  be  it  remembered,  took  place  in  1831. 
Why  was  it  not  then  complained  ofi?  How  should  it  have  escaped  the 
vigilance  of  the  Secretary  of  that  day,  at  the  time  it  took  place?  And,  if  it 
did  not  not  escape  his  vigilance,  why  did  he  not  remove  the  deposites?  So, 
also,  as  to  the  amount  of  loans  in  May,  1832.  That  amount  was  perfectly 
well  known  at  the  time,  and  if  it  proved  any  offence,  why  was  not  the 
punishment  inflicted  then?  How  should  all  other  Secretaries  have  slept 
over  this  great  mischief? 

It  might  further  be  well  asked,  w’hat  evidence  is  there  of  the  existence 
of  any  such  motive  as  is  imputed  to  the  bank  in  this  extension  of  its  loans? 
There  is  no  evidence,  but  the  mere  fact  itself  of  the  extension,  and  it  cannot 
be  denied  that  other  and  very  different  reasons  for  the  extension  may  have 
existed;  so  that  the  charge  is  proved  no  otherwise  than  by  inferring  a  bad 
motive,  from  an  act  lawful  in  itself,  and  for  which  good  reasons  may  have 
existed? 

Nor  is  it  either'  acknowledged,  nor,  so  far  as  the  committee  know, 
proved  that  the  bank  took  an  open  and  direct  interest,  as  a  corporation,  in 
the  election  referred  to.  The  bank  certainly  was  much  interested  in  certain 
accusations  which  had  been  brought  against  it,  and  which  became  subjects 
of  public  discussion  during  the  pendancy  of  that  election.  '  It  had  been 
charged  with  great  misconduct  and  gross  violation  of  its  charter.  These 
accusations  must  undoubtedly  have  called  on  the  directors  for  answer.  If 
made  before  Congress,  they  were  to  answer  before  Congress;  if  made  judi¬ 
cially,  they  were  to  answer  in  the  courts;  if  made  in  an  official  and  formal 
manner,  and  in  that  manner  submitted  to  the  judgment  of  the  country,  the 
directors  were  bound  to  meet  them  before  that  country  by  every  fair  use  of 
fact  and  argument,  not  only  for  the  purpose  \)f  defending  themselves  as  di¬ 
rectors,  but  for  the  higher  purpose  of  maintaining  the  credit  of  the  bank, 
and  protecting  the  property  entrusted  to  their  care.  If  in  thus  defending 
the  bank  before  the  community,  the  directors  carried  their  measures  beyond 
this  fair  object  of  defence,  or  if  they  resorted  to  dishonorable  or  indecorous 
modes  of  discussion;  if  they  sought  rather  to  inflame  than  to  reason;  if 
they  submitted  personal  crimination  for  argument;  if,  even,  they  met  in- 


19 


C  ™  ] 

Vective  and  violence  with  corresponding;  invective  and  violence;  they  fol¬ 
lowed  bad  examples,  and  are  not  to  be  justified.  But  on  their  right  to  de¬ 
fend  themselves  before  the  public  against  grave  charges  brought  against 
them,  and  urged  before  the  public,  the  committee  entertain  no  doubt;  and 
they  are  equally  clear  in  opinion  that  the  Secretary  of  the  Treasury  is  not 
constituted  the  judge  of  the  mode  of  exercising  this  right,  and  cannot  justly 
remove  the  deposites  merely  because  the  conduct  of  the  bank,  in  this  parti¬ 
cular,  has  not  happened  to  conform  to  his  wishes. 

The  committee,  therefore,  consider  this  last  reason  of  the  Secretary  equally 
insufficient  with  the  rest;  and  they  regard  it  as  the  most  objectionable  of  all 
in  its  principle,  inasmuch  as  it  proceeds  on  grounds  which,  if  admitted, 
would  j^ave  a  very  high  official  duty  to  be  exercised  from  considerations 
connected  with  the  political  feelings  and  party  contests  of  every  day,  with 
no  guide  but  the  individual  opinion  of  the  officer  who  is  to  perform  the  act; 
an  opinion  which,  it  is  possible,  may  itself  be  no  less  tinctured  with  politi¬ 
cal  motive  and  feeling  than  the  conduct  which  it  would  reprehend. 

If  an  unlimited  power  be  conceded  to  the  Secretary  to  inflict  penalties  on 
the  bank  for  supposed  political  motives,  in  acts  legal  in  themselves,  where 
is  the  security  that  the  judge  may  not  be  found  acting  under  the  same  im¬ 
pulses  which  he  imputes  to  the  party  accused? 

The  committee  entertain  no  doubt  that  the  immediate  cause  of  the  exist¬ 
ing  public  distress  is  to  be  found  in  the  removal  of  the  public  deposites,  and 
in  the  manner  in  which  that  removal  has  been  made.  No  other  adequate 
cause  has  been  suggested;  and  those  who  justify  the  removal  do  not  so  much 
deny  this  to  have  been  the  cause,  as  insist  that  it  was  not  necessary  that  any 
such  effect  should  have  followed  from  it.  In  other  words,  they  argue  that, 
notwithstanding  the  removal,  the  bank  still  possessed  the  power,  if  it  had 
chosen  to  exercise  it,  of  warding  off  the  blow  which  has  fallen  on  the  coun¬ 
try,  or  at  least  of  mitigating  its  severit}’’. 

Nothing  could  have  been  rationally  expected  but  that  the  bank,  deprived 
of  the  deposites,  and  denounced  by  the  Executive  Government,  would  feel 
itself  called  on  to  take  just  care  of  its  own  interest  and  its  own  credit.  Of 
the  means  necessary  to  the  attainment  of  these  ends,  the  directors  alone  were 
judges,  and  the  committee  have  no  evidence  before  them  to  show  that  they 
have  not  exercised  their  judgment  fairly,  and  with  a  real  solicitude  to  accom¬ 
modate  the  commercial  community,  in  the  altered  state  of  things,  as  far  as 
has  been  practicable  consistently  with  the  security  of  the  institution  which 
it  is  equally  their  duty  to  the  public  and  the  stockholders  to  maintain.  They 
are  certainly  under  every  obligation  of  duty,  in  the  present  distressed  state 
of  the  country,  to  do  every  thing  for  the  public  relief  which  is  consistent  with 
the  safety  of  the  bank,  and  with  those  considerations  which  the  approaching 
expiration  of  its  charter  makes  it  important  for  the  directors  to  regard. 

The  removal  itself,  and  the  manner  of  effecting  it,  are  causes  entirely 
sufficient,  in  the  judgment  of  the  committee,  to  produce  all  the  conse¬ 
quences  which  the  country  has  experienced,  and  is  experiencing;  and  these 
consequences,  they  think,  are  to  be  referred  to  those  causes  as  their  just 
origin.  How  could  any  other  result  have  been  expected?  The  amount  of 
the  deposites  was  nine  millions  of  dollars.  On  this  amount  in  deposite  there 
was  sustained,  no  doubt,  a  discount  of  far  greater  magnitude.  The  with¬ 
drawal  of  this  sum  of  nine  millions  from  the  bank  necessarily  compelled  it 
to  diminish  its  discounts  to  the  full  extent  of  all  that  part  which  may  be 


20 


[  72  ] 

supposed  to  have  been  sustained  by  it.  It  is  to  be  remembered,  too,  that 
this  was  done  at  a  moment  when  business  of  every  kind  was  pressed  with 
great  activity,  and  all  the  means  of  the  country  fully  employed. 

The  withdrawing  of  so  large  an  amount  at  such  a  time,  from  hands  actu¬ 
ally  holding  and  using  it,  could  not  but  produce  derangement  and  pressure, 
even  if  it  had  been  immediately  placed  in  other  banks,  and  if  no  unfriendly 
feeling,  and  no  want  of  confidence,  had  attended  the  transaction.  But 
it  is  quite  obvious  that  the  operation  to  which  the  Secretary  has  resorted  has 
been  attended  witn  both  these  additional  and  powerful  causes  of  derange¬ 
ment.  It  has  created  unfriendly  feelings,  and  it  has  diminished  confidence. 
This  change  of  the  deposites  is  made  on  the  strength  of  charges  against  the 
bank  of  a  very  grave  and  aggravated  nature;  such  as,  if  true,  would  most  se¬ 
riously  affect  its  credit  for  solvency  and  stability.  It  is  proclaimed^  the 
whole  world  as  having  converted  itself  into  a  political  partisan,  misapplied 
its  funds,  neglected  its  highest  duties,  and  entered  on  a  career  of  electioneer¬ 
ing  against  the  Government  of  the  country. 

These  serious  charges  necessarily  put  the  bank  on  its  defence,  and  the  ex¬ 
traordinary  spectacle  is  exhibited  of  a  warfare  by  the  National  Government 
on  the  National  Bank,  notwithstanding  that  the  Government  is  itself  a  great 
proprietor  in  the  bank,  and  notwithstanding  that  the  notes  of  the  bank  are 
the  currency  in  which  the  revenues  of  country  are  by  law  receivable. 

The  true  and  natural  relation  between  the  Government  and  the  bank  is  al¬ 
together  reversed.  Instead  of  enjoying  the  confidence  of  the  Government, 
it  is  obliged  to  sustain  its  most  serious  official  assaults,  and  to  maintain  itself 
against  its  denunciations.  The  banks  selected  by  Government  as  its  agents 
are  themselves  thrown,  perhaps  unwillingly,  into  an  attitude  of  jealousy  and 
suspicion  with  the  Bank  of  the  United  States.  They  become  cautious  and 
fearful,  therefore,  in  all  their  proceedings;  and  thus  those  who  should  co-op¬ 
erate  to  relieve  the  public  pressure,  are  considering  mainly  their  own  safety. 
Fearful  of  each  other,  and  fearful  of  the  Government,  they  see  the  distress 
continue,  with  no  power  of  beneficial  interposition. 

It  may  be  asked,  why  are  not  these  deposite  banks  able  to  maintain  as 
large  a  circulation  on  the  nine  millions  of  deposites  as  the  Bank  of  the 
United  States?  And  will  they  not  be  thus  able  when  the  present  panic  shall 
have  subsided?  The  committee  think  both  these  questions  easily  answered. 

The  Bank  of  the  United  States  has  a  credit  more  general,  it  may  be  said, 
more  universal,  than  any  State  bank  does  possess.  The  credit  of  the  Bank 
of  the  United  States  is  equally  solid,  its  bills  and  notes  received  with  equal 
confidence,  for  the  purpose  of  circulation  and  remittance,  in  every  quarter 
of  the  country.  No  paper  circulation,  so  far  as  the  committee  know,  which 
ever  appeared  in  the  world,  has  approached  nearer  to  the  value  and  unifor¬ 
mity  of  a  specie  currency  than  the  notes  and  bills  of  the  Bank  of  the  United 
States.  To  the  State  banks  these  notes  and  bills  have  performed  the  office 
of  specie.  All  the  State  banks  have  discounted,  upon  the  possession  of 
them,  with  the  same  freedom  and  boldness  as  they  would  have  done  on  an 
equal  amount  of  the  precious  metals.  The  curtailment  of  their  circulation, 
therefore,  is  not  merely  a  withdrawing  of  the  amount  curtailed  from  the 
general  mass  of  circulation — it  is  removing,  rather,  to  the  amount  curtailed, 
the  basis  of  the  general  circulation;  and  although  the  actual  amount  of  notes 
and  bills  has  not  been  recently  greatly  diminished,  there  is  reason  to  suppose 
that  the  amount  held  by  State  banks  has  been  greatly  diminished. 

The  removal  of  the  deph sites  has  dperated  directly  on  the  amount  of  the 

X 


®i  C  ] 

circulating  medium,  at  a  moment  when  that  amount  could  not  bear  any  con¬ 
siderable  reduction,  suddenly  made,  without  producing  sensible  effect.  It 
has  diminished  prices,  and,  in  some  instances,  it  has  had  this  effect  to  a  very 
material  degree.  It  has  operated  on  the  internal  exchange,  and  has,  most 
manifestly,  been  attended  with  very  serious  and  heavy  inconyeniencies  in 
that  important  branch  of  the  national  interest.  More  than  all,  it  has  acted 
on  opioion;  it  has  disturbed  the  general  confidence;  it  has  weakened  the 
public  faith  in  the  soundness  of  the  currency,  and  it  has  alarmed  men  for  the 
security  of  property.  As  yet,  we  hardly  know  it  effects  on  the  credit  of 
the  country  in  Europe.  Perhaps  it  is  not  easy  to  anticipate  those  effects; 
but  if  causes  which  operate  here,  should  be  found  to  hare  been  efficient  there 
also,  a  still  greater  degree  of  pressure  and  distress  than  has  yet  been  felt 
may  be  expected. 

The  committee,  therefore,  cannot  but  regard  the  removal  of  the  deposites, 
on  the  whole,  a  measure  highly  inexpedient,  and  altogether  unjustifiable. 
The  public  moneys  were  safe  in  the  bank.  This  is  admitted.  All  the  du¬ 
ties  of  the  bank  connected  with  these  public  moneys  were  faithfully  dis¬ 
charged.  This,  too,  is  admitted.  The  subject  had  been  recently  before 
the  House  of  Representatives,  and  that  House  had  made  its  opinion  against 
the  removal  known  by  a  very  unequivocal  vote.  Another  session  of  Con¬ 
gress  was  close  at  hand,  when  the  whole  matter  would  again  come  before  it. 
Under  these  circumstances,  to  make  the  removal,  with  the  certainty  of  cre¬ 
ating  so  much  alarm,  and  of  producing  so  much  positive  evil  and  suffering, 
such  derangement  of  the  currency,  such  pressure  and  distress  in  all  the 
branches  of  the  business  of  private  life,  is  an  act  which  the  committee  think 
the  Senate  is  called  on  to  disapprove.  • 

The  reasons  which  have  thus  been  stated,  apply  to  the  whole  proceed¬ 
ings  of  the  Secretary  relating  to  the  public  deposites,  and  make  it  un¬ 
necessary  to  consider  whether  there  be  any  difference  between  his  power 
over  moneys  already  in  the  bank,  and  his  power  to  suspend  future  deposites. 
The  committee  forbear,  also,  to  consider  the  propriety  of  the  measures  adopt¬ 
ed  by  the  Secretary  for  the  safe-keeping  of  the  public  money  since  their 
withdrawal  from  the  bank.  They  forbear,  too,  from  entering  into  any  dis¬ 
cussion,  at  present,  of  the  course  of  legislation  proper  to  be  adopted  by  Con¬ 
gress  under  the  existing  state  of  things.  In  this  report,  they  have  confined 
their  consideration  to  the  removal  of  the  deposites,  the  reasons  assigned  for 
it,  and  its  immediate  consequences;  and  on  these  points  they  have  formed 
the  opinions  which  have  now  been  expressed. 

They  recommend  to  the  Senate  the  adoption  of  the  resolution  which  has 
been  referred  to  them. 


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